Katelyn Washington
New Jersey state tax: Overview
New Jersey residents know they can pay some high taxes. Everything from gas tax to property taxes are among the highest in the states. Garden State heirs may also pay a death tax.
However, there is some good news: New Jersey's state sales tax isn't so high compared to sales taxes in other states. After all, several products in the state are exempt from tax, and New Jersey's sales tax rate is reduced in some areas.
Plus, you may qualify for a New Jersey property tax relief program to help you with your high homeowner taxes.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Here's more of what you need to know about the Garden State's tax disposition.
[Data for this state tax guide was gathered from a number of sources including the Census Bureau, the state’s government website, the Sales Tax Handbook, and the Tax Foundation. Property taxes are cited as a rate percentage rather than the assessed value.]
New Jersey income tax
New Jersey has a graduated state individual income tax rate that ranges from 1.4% to 10.75%, according to the Tax Foundation.
New Jersey retirement taxes
New Jersey tax on retirement income: New Jersey doesn't tax Social Security retirement benefits, Military pensions, or Railroad Retirement benefits.
Taxpayers 62 and older (or those who have a disability) may exclude all or part of their retirement income from state taxation. To qualify for the exclusion, taxpayers cannot have an income above $150,000.
The maximum deductions are $75,000 for single filers, $50,000 for married filing separately, and $100,000 for joint filers.
Tax on Taxable Income: Low of 1.4% (on up to $20,000) and a high of 10.75% (on more than $1 million)
- Social Security: Not taxable
- Pensions: Partially taxable (Income requirements apply)
- 401(k) and IRA Distributions: Partially taxable (Income requirements apply)
New Jersey sales tax
New Jersey imposes a 6.625% state sales tax. Localities can add an additional 2%.
However, the average local and combined sales tax rate is only 6.60%, according to the Tax Foundation.
- Groceries: Exempt
- Prescription drugs: Exempt
- Diapers: Exempt
- Women's menstrual products: Exempt
How much are property taxes in New Jersey?
In New Jersey, the average effective property tax rate is 1.77%, which is one of the highest in the nation.
New Jersey Property Tax Breaks
Eligible New Jersey residents who owned or rented their home during the tax year may qualify for ANCHOR property tax relief. Last year's payments were up to $1,750 each.
Additionally, qualifying New Jersey homeowners may also receive a property tax freeze. To qualify, residents must have lived in their current home since at least 2020, among other requirements.
These two New Jersey property tax relief payments are in addition to Stay NJ, a new property tax relief program set to make payouts in early 2026. Learn more on the state's Division of Taxation website.
New Jersey gas tax
Gasoline | $0.11 per gallon |
Diesel | $0.14 per gallon |
Source: Sales Tax Handbook
New Jersey taxes on alcohol and tobacco
Product | Tax Amount |
|---|---|
Cigarettes | $2.70 per pack |
Other tobacco products | 30% of wholesale price |
Medical Marijuana | 2% |
Recreational Marijuana | 6.63% |
Source: Sales Tax Handbook
Product | Tax Amount |
|---|---|
Beer | $0.12 per gallon |
Wine | $0.88 per gallon |
Liquor | $5.50 per gallon |
Source: Sales Tax Handbook
New Jersey estate and inheritance taxes
There is no longer an estate tax in New Jersey, but that doesn't mean residents are off the hook for paying death taxes.
The state has an inheritance tax of between 11% and 16%. However, the heirs below won't need to pay a thing.
- Spouses
- Children
- Grandchildren and great-grandchildren
- Parents and grandparents
- Civil union partners
Related Content
-
Investing Abroad Could Pay Off — Here's HowCountries overseas are stimulating their economies, and their stocks are compelling bargains.
-
Retire in Belize for Stunning Natural Beauty and CultureBelize offers miles of protected land and ocean, a rich mix of cultures and a chill lifestyle. Best yet — the income requirement is just $2K per month.
-
2025 SALT Cap Could Hurt Top 'Hidden Home Cost'Tax Deductions The latest GOP tax bill might make hidden homeowner costs worse for you. Here’s how.
-
Retire in the Bahamas With These Three Tax BenefitsRetirement Taxes Retirement in the Bahamas may be worth considering for high-net-worth individuals who hate paying taxes on income and capital gains.
-
2025 Virginia Tax Rebate Checks Coming Soon? What to Know NowTax Rebates Given a historic 2025 gubernatorial race, tax policy will remain a key issue for Virginians in the months ahead.
-
Summer Backyard Ideas With Added Tax Benefits for 2025Tax Tips Find out how these summer 2025 home projects can help you save on taxes next year.
-
Coverdell ESAs vs. 529 Plans: Which Should You Choose?Savings Accounts These savings accounts can offer tax benefits for school and retirement expenses. Here’s how.
-
Homeschoolers Could Soon Save on Expenses With 529 PlansSavings Accounts A new House GOP bill could change how you save for your child's homeschool education. Find out how.
-
Five ‘Big Beautiful Bill’ Tax Changes to Watch in the SenateTax Policy The House passed its version of Trump’s "One Big, Beautiful Bill." Here’s what to look for as Senate Republicans take up the mega legislation.
-
New GOP Car Loan Tax Deduction: Which Vehicles and Buyers QualifyTax Breaks To fulfill Trump's campaign promise, GOP lawmakers want to offer a tax deduction for car loan interest. How would it work?
